Economic downturn throws more fuel on fire of financial crime on Scotland

The total amount of fraud in Scotland last year was just below £97 million, although this figure was skewed by a single illegal fish landing case.

According to KPMG’s latest “fraud barometer”, Scottish courts dealt with 11 cases of high value financial crime – classed as being in excess of £100,000 – compared to 16 in 2010, 18 in 2009 and 15 in 2008.

While the overall number of cases has fallen back, the report points to a rise in complex, high-value frauds.

Ken Milliken, forensic partner for KPMG in Scotland, said: “Fraud barometer figures in Scotland and across the UK include large ‘one-off’ cases every year and this year [2011] is no different.

“However, in my experience of 15 years’ of investigating allegations of fraud and misconduct, these are not ‘one-off’ incidents.

“In amongst the wide ranging types and scales of major fraud, there are a small number of complex, high-value frauds taking place at any point in time.

“The figures for 2011 show both that this continues and also that police forces and prosecutors are not afraid to tackle these large and complex cases.”

UK wide, fraud value reached an all-time high of £3.5 billion in 2011, despite a 20 per cent drop in recorded cases.

Milliken said the figures represented the “thin edge of a much bigger wedge”.

He added: “Sadly, due to the current economic circumstances, the forecast is that the situation will get worse before it gets better.

“It is important that organisations don’t become myopic on this point and ensure they have robust prevention and detection mechanisms so that they don’t lose value through the back door.”

The value of fraud committed in Scotland last year was more than double 2010’s total of £43.4m – a result that was again dominated by cases of illegal fish landings.

Other cases cited by KPMG in 2011 include a retired solicitor and former policeman who were charged in connection with a £500,000 fraud involving mortgages on flats in Kirkcaldy, Fife.

The report showed that the largest perpetrators of fraud were professional criminals, who accounted for 98 cases across the UK, amounting to £1.4bn worth of economic crime.

“They have adapted quicker than most to exploit financially vulnerable individuals and organisations as a result of the economic downturn,” today’s study noted.